Acme corporation is considering two alternative injection molding machines, and MARR IS 15% per year. Plot the sensitivity of each alternative in Excel for the following three cases of varying Net Annual Revenue (NAR), where NAR = Annual Revenues - Annual Expenses: -50% 0% +100% Using annual worth (AW) analysis, which alternative has higher sensitivity to the Net Annual Revenue (NAR)? Show computations and paste an Excel spider chart. Item Alternative A Alternative B $500,000 $150,000 $75,000 $50,000 $375,000 $130,000 $80,000 $37,000 Capital investment Annual revenue Annual expenses Salvage value Useful life 5 vears 6 vears

Acme corporation is considering two alternative injection molding machines, and MARR IS 15% per year. Plot the sensitivity of each alternative in Excel for the following three cases of varying Net Annual Revenue (NAR), where NAR = Annual Revenues - Annual Expenses: -50% 0% +100% Using annual worth (AW) analysis, which alternative has higher sensitivity to the Net Annual Revenue (NAR)? Show computations and paste an Excel spider chart. Item Alternative A Alternative B $500,000 $150,000 $75,000 $50,000 $375,000 $130,000 $80,000 $37,000 Capital investment Annual revenue Annual expenses Salvage value Useful life 5 vears 6 vears

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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XYZ has determined that market dynamics will result in some annual variations in the numbers they had previously estimated. Deeper market research has revealed that the cost of acquiring a customer is estimated to be $2,000. Also, estimates over five years for the remaining customers at the end of each year with average revenues and cost for each customer are presented in the following table. Considering a discount rate of 15%, calculate the net CLV for XYZ. Discount rate = 15% Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Number of Customers 200 150 120 90 72 54 Revenue Per Customer 5,000 5,000 5,500 5,500 6,000 Variable Cost Per Customer 2,000 2,000 1,800 1,800 1,500
YOLO Construction Co. is planning to purchase a new truck. Company uses MARR as 10% per year. Evaluate the following two alternatives by Present Worth Analysis using Least Common Multiple (LCM) technique. Select the PW value of Alternative A. А B First Cost, S Annual Income, S/year -170000 -130000 22000 and increasing 29000 starting from year 1 by $500 each year -7000 Annual Cost, $/year Major Maintenance Cost, every 3 years, S Salvage Value, $ Life, years -11000 -10000 17000 10000 4 Select one: O a. -195520.8 O b. -142110 O C. -116200 O d. -146445.8 O e. -191185
A process for making a laboratory-grade sodium phosphate will have a first cost of $320,000 with annual costs of $40,000 and revenue of $98,000 per year. At a return requirement of 20% per year, the payback period is closest to:a. 3 yearsb. 5 yearsc. 7 yearsd. ∞; it will never pay off
A start up business is considering two types of equipment - data are as follows: TYPE A TYPE B First Cost Annual operating cost Annual labor cost P200,000.00 P300,000.00 32,000.00 50,000.00 24,000.00 32,000.00 Insurance and property taxes Payroll taxes Estimated life 3% 4% 3% 4% 10 10 The minimum required rate of return is 15%. What is the exact rate of return?
Ans.
possible annual sales may not exceed $50 lakhs and if there is competition it may fall considerably. of a new 48. A company has a project to install a new machine exclusively for the manufacture product which is expected to have good demand and reasonably high margin. Maximum e company has obtained quotations and short listed two offers for the new machine. Details in respect of the two models are given below : Machine Models M, $ 50 lakhs 5 lakhs 15 lakhs $ 50 lakhs Maximum possible sales per year Fixed Costs per year Estimated profit for maximum sales 8 lakhs 17 lakhs You are required to calculate : (i) Break even sales of each machine; (ii) Sales at which both models will give the same profit;
Two equipments A and B have initial costs of $100,000 and $120,000 and expected to generate annual savings during the first year of $88,000 and $98,000 respectively. The value of these annual savings is expected to increase by 10% per year (over previous period). Assume service life of 2 years, operating hours per year of 4500, Determine the $ savings/ hour for each equipment and select the optimal equipment based on your results. Use i = 10%.
! Required information A process for producing the mosquito repellant Deet has an initial investment of $165,000 with annual costs of $43,000. Income is expected to be $90,000 per year. What is the annual breakeven production quantity for both payback periods if net profit, that is, income minus cost, is $10 per gallon? (Consider the rounded values of years calculated in part a. Also, round your answer to the nearest integer.) When i = 0%, the annual breakeven production quantity is determined to be When i = 12%, the annual breakeven production quantity is determined to be gallons per year. gallons per year.
When calculating Return on Investment (ROI) we take the benefit/cost x 100. Or as we reviewed in class: ROI= (average annual profit/total investment) x 100. So, if I invest in Fall protection for my company at a cost of $10,000, and for the purposes of calculation, you determine if it saves that company 10% of it's fall- related WC claims annually, the annual benefit would be around $3,000 annually, what would you project your ROI to be? (one best answer) 30% 10% $3,000 I don't need to calculate the ROI, because it is required by law.
Answer using excel: Machine A costs $316 and produces a profit of $106 at the end of each year for 7 years, while Machine B costs $128 and produces a profit of $71 at the end of each year for 4 years. Assuming the operation continues indefinitely and the cost of capital is 13%. Calculate equivalent annual value (EAV) to determine the better option. Enter EAV for Machine A below.
Silastic-LC-50 is a liquid silicon rubber designed to provide high clarity, superior mechanical properties, and short cycle time for high speed manufacturers. One high-volume manufacturer used it to achieve smooth release from molds. The company’s projected growth would result in silicon costs of $26,000 next year and costs increasing by $2000 per year through year 5. The interest rate is 10% per year. (a) What is the present worth of these costs using tabulated factors? (b) How is this problem solved using a spreadsheet? Using a financial calculator?
Advanced Modular Technology (AMT) makes energy cleaner, safer, more secure and more efficient. It typically exhibits net annual revenues that increase over a fairly long period. In the long run, an AMT project may be profitable as measured by IRR, but its simple payback period may be unacceptable Evaluate this AMT project using the IRR method when the company MARR is 26% per year and its maximum alowable payback period is three years. What is your recommendation? Capital investment at time 0 Net revenues in year k $99.000 $21.000 + Market (salvage) value Life $0,000 - (-1) $9,000 7 years The internal rate of return is%. (Round to one decimal place.)

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